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Senior-level staff in national, state, and city governments, heading or managing departments that work in transport and related areas such as: motor vehicle licensing and regulation, land use and transport planning, public transport provision (both government and private operators), traffic management, pollution control, road safety, housing, and urban poverty alleviation

MGI has estimated a capital outlay of USD 1.182 trillion (about Rs 53 lakh crores) for the next 20 years to build up services in cities in India to enable them to play their role in the desired economic growth of the country.

Mass rapid transit services and roads together require a major share of the projected investment; more than half of the estimated capital expenditure, i.e. USD 392 and 199 billion (Rs 17 & 9 lakh crores) respectively.

As per the present practice, the government makes budgetary allocations both in the revenue and the capital account.

This is linked to the overall government budgeting and not necessarily to the needs of urban transport in a city and hence is seldom adequate.

A policy on budgetary allocations, user charges, and tapping other sources of funds based on taxation of non-user beneficiaries, land development and vehicle taxation on the polluter-pays principle should be provided to the city.

All cities should have formula-based funding from the central and state governments, and should leverage debt as well.

Involvement of the private sector is a potential source for financing and managing urban transport services in the city.

This source should be used for services that yield direct revenue to the private entrepreneur to recover his investment with commercial profit.

In the 11th FYP, of the total estimated investment, the states accounted for a 32.6 % share

Within state investment, the state budgetary support accounted for a 66.3% share, followed by a 23.6 % share from borrowings, while internal generation contributed to only 10.1 % of the total investment

12th Central Finance Commission (CFC) made recommendations on the measures needed to augment the Consolidated Fund of a state to supplement the resources of the panchayats and municipalities

Rs. 20,000 crore for the panchayats and Rs. 5,000 crore for the municipalities may be provided as grants-in-aid to augment the Consolidated Fund of the states for the period 2005-10 to be distributed with inter sate shares

The annual outlay in mega cities such as Delhi for the year 2012-13 indicates an outlay of Rs 3372 crores for the transport sector, which is 22 %of the total plan outlay.

The temporal trends of outlays in the 9th , 10th, and 11th FYP period of Delhi reveal that the total outlay increased from 15541.28 cr. in the 9th FYP to 23,000 cr in the 10th FYP and 45,000 cr. in the 11th FYP.

The corresponding share on Transport was 20.3 percent, 23.7 percent, and 33.9 percent respectively, exhibiting the increasing importance of transport in the city’s overall development budget.

Equity financing continues to be a vital source of investment for the infrastructure sector.

Given the under-developed state of the Indian debt market, infrastructure developers have to rely quite a lot on equity subscription to fulfil their capital requirements.

While both the primary and secondary equity markets have taken a hammering in the past year, private equity (PE) has remained a surprisingly buoyant source of funding.

Equity investment with respect to infrastructure projects can be divided into two types: (a) active (or ‘direct’) equity investors that seek to participate in the management or operations of the project; and (b) passive (or ‘portfolio’) equity investors that provide for only their funds.

The Department of Economic Affairs, Government of India defines PPP as: an arrangement between a government or statutory entity or government-owned entity on one side and a private sector entity on the other, for the provision of public assets and/or related services for public benefit, through investments being made by and/or management undertaken by the private sector entity for a specified period of time, where there is a substantial risk sharing with the private sector, and the private sector receives performance-linked payments that conform (or are benchmarked) to specified, pre-determined, and measurable performance standards.

The ultimate accountability to users for the provision of these services vests is with the public entity – even if delivery is by the private partner

Examples of private sector involvement in core sectors: airlines, telecom services, oil refining -private sector is able to take on large projects, complex operations, and can handle reasonable commercial risks attached to projects such as Design, Financing, Construction, Operations, and Maintenance.

Risks that often affect projects implemented by the public sector - time overrun, cost overrun, change of scope, inadequate designs, lower construction quality, leakage of revenues, high maintenance costs – can be assumed by the private player

There is also incentive for the private party to use appropriate technology, develop innovative design solutions, improve project management practices, install more efficient revenue collection practices, and use a life cycle cost approach.

Focus shifts to service delivery – construction responsibility is integrated with O&M obligations and, together with appropriate quality monitoring and service delivery-linked payments, this could enhance the levels of service delivery

It is possible to roll it into a program and have a time-bound implementation plan

Can lead to better overall management of public services – transparency in prioritization, selection, and ongoing implementation

The public entity should have the enabling authority to transfer its responsibility – enabling a legislative & policy framework as well as administrative order; the instrument of transfer is through a contract

There is a significant transfer of responsibility to the private entity – usually including large financial investment obligations

Payment to the private entity for services – directly by users or paid by the public entity

These are conditional on achieving pre-specified levels of performance

The nature of the relationship is usually long-term to derive maximum benefits

Buses are the predominant mode of inter-city transport, especially for connectivity to and from New Delhi.

Before the project, terminal facility was ad-hoc, with very few passenger facilities. Bus handling capacity was also limited, and would not be able to cater to the expanding demands on inter-city transport

The Mussoorie Dehradun Development Authority (MDDA) envisaged the development of a modern, state-of-the-art inter-city bus terminal with ancillary facilities under PPP mode

Feedback Ventures was appointed as project advisor for project configuration, structuring, bid process, and award

MDDA to receive guaranteed annual revenue of Rs 81 Lakhs (inflated 5% annually) from the lapse of the moratorium period onward, which would aggregate to approxRs 19.16 crores over the entire concession period.

Ultra Modern Bus Terminal with all modern facilities and amenities. Showcase project for the city

Dehradun city to have first Mall-cum-Multiplex Complex which will act as one of the finest leisure entertainment centers for residents of Dehradun and floating populace.

Multilateral development banks (MDBs) provide finance for investments in human and physical capital that promote development.

This is in broad terms the mandate of the World Bank (WB) and the three regional development banks – the African Development Bank (AfDB), Asian Development Bank (ADB) and Inter-American Development Bank (IADB) – that were established between the late 1940s and the mid 1960s.

Multilateral banks and bilateral public aid help to fund investments in transport systems but not in the operating of the systems.

Soft loans, namely, loans with conditions which are more favorable than bank loans in terms of:

duration: very long-term loans of 15, 20, and even 30 years;

interest rates: bonus rates which are smaller than those on the banking market;

grace periods given before the first installment

The conditions of these loans vary according to the situation in the country; the most favorable treatment is given to the least developed countries.

Typically, soft loans have extended grace periods in which only interest or service charges are due. They also offer longer amortization schedules and lower interest rates than conventional bank loans.

Typically, soft loans will have one or more of the following characteristics:Soft loans, namely, loans with conditions which are more favorable than bank loans in terms of:

A lower rate of interest. Some EU subsidised loans may charge less than half the rate of a high street bank.

A repayment holiday before you must start repaying

Offering to act as a guarantor or otherwise arrange for a business loan without the need for you to provide security

Example: Delhi Metro Rail Corporation (DMRC) was set up with 50:50 equity participation between the Government of India and the Delhi Government. The project has been implemented in three phases with an outlay of approximately Rs. 55,000 crore, 55% (approximately Rs. 30,000 crs) of which has come from Japan Bank of International Cooperation (JBIC) as an inter- government loan

The Global Environment Facility (GEF) was established in 1991 to provide funding to assist developing countries in meeting the objectives of United Nations Framework Convention on Climate Change (UNFCCC)

It now serves as a financial mechanism of UNFCCC by funding projects and programmes that protect the global environment

GEF grants support projects related to biodiversity, climate change, international waters, land degradation, the ozone layer, and persistent organic pollutants

There are three implementing agencies which manage GEF projects on the ground - UNEP, UNDP, and World Bank.

GoI has initiated the Sustainable Urban Transport Project with the support of the Global Environment Facility (GEF).

The total GEF grant proposed for the project is US$ 25 million, which will be complemented with a grant of US$ 170 million from GOI, State Governments, and Implementing Agencies (IA) along with US$ 105 million co-financing from the World Bank.

The project is to be implemented over a four-year period starting from 2010.

Primary Stakeholders in this program are Ministry of Urban Development (MoUD), Ministry of Environment and Forest (MoEF), UNDP, and the World Bank. MoUD is the nodal agency for this program’s implementation

A CDM program is one in which emissions reductions are achieved by multiple activities executed over time as a result of a government measure or private sector initiative. The basic characteristics of a CDM program are:

It occurs as a result of a deliberate public sector measure (voluntary or mandatory), or a private sector initiative.

It results in a multitude of dispersed activities that are induced by the program and would not occur but for the implementation of the program.

The GHG reducing activities do not necessarily occur at the same time or in the same location.

The type, size, and timing of the emission reducing activities induced by the program may not be known at the time of project registration. However, the types and sizes of the expected activities must be identifiable ex ante, attributable to the program, and verifiable ex post.

The various activities under the CDM program are submitted to validation and registration through a single Project Design Document.

A case of adoption of CDM is Transmilenio, Bogotá in Colombia, which is the first BRT project to be successfully registered under CDM for carbon credits.

Credits are available for projects which have a clear plan to reduce existing public transport capacities, either through scrapping, permit restrictions, or other means, and replace them with a BRT system.

Transmileniowill generate credits from the following sources:

Improved fuel use efficiency

Use of new large buses and scrapping old buses

Mode switch due to availability of more efficient and attractive public transport system

The Delhi Metro has been certified by the United Nations as the first metro rail-based system in the world to get carbon credits for contributing to the fight against climate change by helping to reduce pollution levels in the city by 6.3 lakh tons every year.

The Delhi Metro has helped remove more than 91,000 vehicles from the roads of Delhi daily.

The organization has also earned carbon credits worth Rs 47 crore annually for the next seven years. With nearly 20 lakh people taking the new age transport system every day, the Metro has helped reduce pollution and emission of green house gases, as it is a completely non-polluting and environmentally-friendly system.

DMRC has helped in reducing the emission of harmful gases into the city’s atmosphere, and the United Nations body administering the Clean Development Mechanism (CDM) under the Kyoto Protocol has certified that DMRC has reduced emissions.

PCMC has set up an Urban Transport Fund (UTF), managed by an SPV, PCMC Infrastructure Company Ltd (PICL), to finance its share of the BRT project and develop infrastructure along the BRT routes, which includes providing sanitation, water, and other civic amenities to people living along the BRT corridor.

Accordingly, 100 meters on both sides of the corridor have been earmarked as the “BRT Influence Zone”, and various instruments are used to capture part of the incremental value from the influence zone.

The financing instruments are

Premiums charged for loading TDR in the influence zone

Development charges in the influence zone

Incremental taxes, as the influence zone is designated a high property tax zone

Generating revenue by capturing the benefit of increase in land and real estate value in the proximity of the BRT corridor to partially finance the development project

PCMC has raised the FSI in the influence zone from 1 to 1.8 with the added FSI of 0.8 being achieved through loading of TDR

TDRs can be generated anywhere in the city and applied to the influence zone, subject to some restrictions.

The PCMC area is divided into zones A, B, C, where A is most congested, and C is least developed.

A premium (which is like a one-time tax) is charged for using TDR in the influence zone according to originating TDR zones, as per the proposed rates Rs. 300/600/900 per sq. ft for originating zones A/B/C.

The rationale for gradation of the premium is based on incentivizing movement away from congested zones, which therefore have lower premium (“tax‟).

To face both of these challenges, BMTC decided to leverage its major asset: land holdings in strategic locations throughout the city

BMTC therefore developed the innovative concept of

Traffic and Transit Management Centers (TTMCs)

The TTMC concept combines the development of passenger terminals with the creation of commercial real estate space

Revenue from rent of the commercial real estate space would cross subsidizethe construction cost of the passenger terminal and amenities, and also form a source of continuing additional revenue for the corporation.

The TTMC model from Bangalore provides a useful example of how to leverage land holdings to solve two challenges at once: the need to provide support infrastructure for bus services and the need to generate non-fare revenue to subsidize operations.

As urban areas expand, public transport authorities need to recognize and actively explore the commercial opportunities that their land holdings provide.

Innovations such as PPP financing can further improve the financial viability of such strategies.

However, the commercial exploitation of land holdings should always keep the need to improve transport services as the primary goal

The Ministry of Road Transport and Highways (MORTH) is the apex body that provides broad guidelines for regulation of motor vehicles (including auto-rickshaws and taxis), under the Central Motor Vehicles Act.

At the city level, auto-rickshaws and taxis are regulated by the State government, under provisions of the State Motor Vehicle Rules.

Regional Transport Authorities (RTAs) are the regulatory bodies set up by the State governments that are in charge of fare regulation for auto-rickshaws and taxis.

Many organizations and representatives (from government, unions as well as passengers/consumers) were consulted during the deliberations of the committee, leading to general disapproval and displeasure.

Currently, a public interest litigation (PIL) proposed that the government appoint an expert panel to decide some of the components of the revised fare, which was rejected.

The advantage of periodic and timely revision is that the fare hike is nominal and STUs do not incur losses. However:

In order to avoid frequent hike in fares, the government has decided that the fares would be hiked only when the combined burden of diesel price increase and DA hike, as per the formula above, exceeds 0.25 paisa per passenger kilometer (i.e. total burden exceeds Rs. 11 crore in a year).

Whenever there is a decrease in diesel price, the fare will also decrease.

The additional revenue realization on account of fare hike will not exceed the total increased cost of diesel and DA.

The STU will have liberty of distributing the quantum of fare increase between different types of services such as ordinary, deluxe, express, and luxury.

The discounted value of each year’s cash flow (inflow minus outflow), through the entire duration of the project.

Notionally, cash flow in the future is less valuable than cash flow earned today (because of inflation, uncertainty, delayed consumption). Hence, future cash flows are reduced by a discounting factor for each subsequent year in the future

Internal Rate of Return (IRR)

The rate of return that makes NPV = 0.

Other things being equal, the higher the IRR, the more desirable the project

If one neglects to consider the non-financial benefits of a PPP project, then one is at risk of ignoring a sizeable set of benefits accruing from the project.

In any PPP project, there will be both monetary and non-monetary benefits (as well as losses). The latter is known as the positive and negative externalities of the project.

In economic viability analysis, we try to capture the notional value of these externalities for all individuals and entities in society. These benefits (or losses) could be social, economic, environmental, health-related, cultural, etc.

The most common tool to do this is a socio-economic cost benefit analysis.

This is a systemic evaluation process for calculating and comparing benefits and costs of a project, in order to aid the decision (generally for the government entity) on where to make an investment decision or not.

Like financial evaluation, CBA is expressed in monetary terms, where future values may be discounted to make them equal to present values. HOWEVER, discount rate, if used, should be low, because the benefits and losses to every generation are equally important.

The process of attaching monetary values to these intangible benefits can be very subjective. There are rigorous methodologies available in the public domain on how to calculate some of the more common benefits, such as carbon emission reduction, lives saved, jobs created, etc.

The public decentralized body Metrobús is responsible for the planning, administration, and control of the Corridor System of Passenger Public Transport of the Federal District.

The transport companies CorredorInsurgentes S.A. de CV formed by the old concesionaries of Route 2 in the insurgents corridor and Red de Transporte de Pasajeros del Distrito Federal. One private and one public company will operate the 84 articulated buses in a proportion of 75% and 25% respectively.

One company specialized in the operation and maintenance of the payment systems (Imbursa)

One private fiduciary for the administration, investment, and distribution of the resources generated by the Insurgentes Corridor.